More on that Tone Change

• Posted by Adam Warner
• on October 30th, 2009

Another sign the worm has turned a bit? The Bullish percent charts are turning over.

Long story short is you take an index and count the number of stocks in bullish PnF patterns (in X’s) and then plot that on it’s own PnF chart as a percentage. Like this chart above on the SPX.

The two concepts are “field position” and trend. The field position refers to where it is on the scale, which obviously can only go to 100. So the recent reading near 88 is …..well, as high as this thing has gone apparently, so that’s lousy field position if you’re bullish. How much better can it get?  Well, the problem was you could have said the same thing when it broke 80. So hence the second part, you need to see a trend change, a switch into O’s. And that’s where we sit now.

Kevin Depew on Minyanville runs this for all sorts of indices. And for the record, NYSE, Nazz 100, and the Russell 2000 have all fllipped to O’s recently, as has the NYSE and Nasdaq High-Low Indices. The lone holdout, the Nasdaq Composite, is about a sneeze away from O’s.

Kevin has a primer on using these charts here.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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